## Facts

- B. Hill Simmons was investigated by the Internal Revenue Service on a net-worth basis for tax years 1941–1953 and paid an income-tax deficiency of about $43,000.
- Simmons died on December 27, 1955, having never intended to file any refund claim for those taxes.
- The executors hired counsel to review Simmons’s tax affairs; counsel concluded a refund claim should be pursued.
- The executors filed a refund claim on February 1, 1957, for roughly $60,000; the IRS disallowed it and refund litigation followed.
- In 1960, the refund litigation was resolved by a Department of Justice-approved compromise for $41,187.
- On the estate tax return, the executors listed the refund claim as having “no value” at the date of death and asked that estate-tax liability be held in abeyance pending the refund claim’s outcome.
- The Commissioner determined the refund claim was includible in the gross estate and valued it at the later compromise amount.
- A jury in the district court found the claim had zero value at death; judgment was entered for the estate, and the United States appealed.

## Issues

1. Whether a tax-refund claim existing at death may be found to have zero fair market value as of the date of death even though it was later compromised for a substantial sum.
2. Whether sufficient evidence supported the jury’s zero-value finding, and whether the valuation question was properly submitted to the jury.

## Decision

- The Fifth Circuit affirmed the judgment for the estate.
- The court accepted that the refund claim was “property” includible in the gross estate under I.R.C. § 2031.
- The court held that fair market value must be determined as of the date of death, not by later events.
- The later compromise amount was evidence of value but did not conclusively establish the claim’s date-of-death value.
- The evidence permitted a reasonable jury to find that, at death, the claim was sufficiently uncertain and speculative that a willing buyer would pay nothing.

## Legal Principles

- Intangible rights, including unasserted tax-refund claims, constitute “property” includible in the gross estate under I.R.C. § 2031 if they exist at death.
- Estate-tax valuation is determined at the date of death under a fair-market-value standard (willing buyer/willing seller with reasonable knowledge at that time).
- Subsequent settlements or recoveries do not automatically fix date-of-death value; post-death developments are not controlling on the valuation date.
- Valuation of disputed or contingent claims is generally a fact question; appellate review defers to a jury’s valuation finding if supported by evidence.

## Conclusion

The court upheld a jury’s determination that an estate’s income-tax refund claim had zero fair market value at the decedent’s death, rejecting the government’s argument that a later settlement amount necessarily established the claim’s earlier estate-tax value.


United States v. Simmons, 346 F.2d 213 (5th Cir. 1965)